Economics: Poverty declines, incomes rise, yet major social deprivations prevail

MEXICO - Report 14 Aug 2023 by Mauricio Gonzalez and Francisco González

The results of the 2002 National Household Income and Expenditure Survey (ENIGH) were released at the end of July, while this past week the National Council for the Evaluation of Social Development Policies (Coneval) released the poverty figures for the same year, using data from the same survey. The data indicate an increase in average income consistent with the growth in employment and wages posted between 2018 and 2022. Of particular significance was that the increase has been concentrated in households in the lowest income brackets, while in the highest decile a slight decline was even registered. Based on these results, the conclusion, widely touted by the President and his supporters, was that inequality has decreased when compared to 2018 levels.

In addition, multidimensional poverty also showed a significant reduction in 2022 compared to 2018. This is due to growth in household monetary incomes from wages as well as transfers from government social welfare programs. Nevertheless, there has not been a favorable evolution in terms of a reduction in extreme poverty or in the number of households in social deprivation. In fact, the number of people experiencing social deprivations grew, mainly due to an increase in the population's experiencing deficiencies in accessing educational and health care services.

Part of the problem is that while the government eliminated the Seguro Popular health program, its planned universal, free-of-charge, and quality system to replace it is still not in place, leaving many affiliates without institutional options. In addition, government subsidy programs, such as for senior citizens, are provided to the population as a whole, not just the poorest strata that need them the most, limiting their effectiveness.

Nevertheless, growth in household income has been aided by higher salaries in general and major increases in the minimum wage. Both of these have outperformed inflation, along with the implementation of reforms aimed at eliminating outsourcing, which have boosted the wages and benefits of the workers affected.

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